Automation in the Legal Industry

Author

Ryan Becker

Ryan is a Senior Director of Strategic Solutions at Special Counsel, providing consultative solutions to both law firms and corporations throughout the United States, Europe and Asia.

The Corporate Legal Operations Consortium’s (CLOC) 2nd Annual State of the Industry Survey shows a growing trend. More than half (53 percent) of respondents to the survey say they now use at least one alternative legal service provider. This growth is driven by more than one in three respondents who said they increased their use of alternative providers over the past year. CLOC went on to project that this growth will continue. It is also a significant component of the fact that 46 percent of all corporate legal spending goes to external firms.

It’s not hard to see why alternative providers are growing in prominence and earning client business. When asked to rank 11 law firm evaluation criteria in order of importance, respondents rated Quality of Work and Cost Effectiveness #1 and #2, respectively. Alternative providers are highly motivated to deliver on those demands, and are able to innovate through legal automation with greater focus than in-house or traditional external counsel can.

Technology Investments Growing

Respondents to the CLOC survey show that many companies have
already made significant investments in some forms of legal automation. For
example, 65 percent have implemented a contract management solution, and 56
percent use eSignature tools. But fewer than 30 percent of respondents have
implemented legal automation in important areas like legal analytics, records
management, and outside counsel compliance.

Cautious uptake in these emerging areas of legal automation
also helps explain the gap between interest and adoption of artificial
intelligence (AI) legal tools. Interest in AI is extremely high. Nearly half
(45 percent) of respondents are at least exploring AI’s potential to enhance
legal operations. But only 12 percent have actually implemented AI tools.

The Case for Automation

Legal automation solutions sometimes don’t show their true
value until a firm needs them most. For example, a regulatory proceeding
demanded that a large energy utility review one million complex documents in
the span of just one month. The review itself had several complex stipulations
and technical demands, including the protection of proprietary data.

In order to meet the stringent and high-stakes demands of
this case, the utility and its outside counsel engaged Special Counsel as an
alternative legal service provider. Over 100 document review attorneys were
seamlessly linked with in-house and outside counsel through collaboration tools
and were quickly trained on the deep technical matters at stake.

The Value Of Specialization

A specialized challenge like the detailed review of one
million complex documents in a single month is a black swan event for most
organizations. It may not be cost-effective or rational to staff an in-house
department or even keep a traditional firm on retainer to meet such legal
automation demands.

Alternative legal service providers, on the other hand, can
focus their attention on solving complex puzzles and heavy processing burdens
in an efficient, tech-enhanced, and cost-effective manner. Special Counsel, for
example, completed
the utility company’s project on time and $250,000 under budget. The
streamlined process allowed the utility’s outside counsel to focus on weightier
matters relating to the merits of the case.

Much of the cost savings was possible because the project
manager and quality control teams conducted an extensive review after the first
week and saw a persistently high error rate on a few specific types of
document. They immediately called in specialized training that slashed the
error rate. Project management went further by building a search filter that
removed 10 percent of the document universe from review, because they were not
part of the case. Having extra time and resources free to focus on the
essential legal questions at hand is even more valuable.

Companies and their business relationships generate more
data, more connections, and more potential points of contention than ever
before. Legal automation, and the firms that emphasize efficient and accurate
tailored services powered by technology, helps companies address seemingly insurmountable
and unforeseeable challenges.

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